Form 3921 How Do I File Form 3921?

The IRS requires employers to complete this field if there are multiple accounts for the same employee. Otherwise, the IRS suggests that employers complete the field as a best practice. At the top of the form, there is a box marked, “Corrected (if checked).” If your employer must refile a revised version of the form, this should be checked. If there’s a resulting underpayment of taxes due to mistakes in Form 3921, the IRS can charge interest on the owed amount from the due date of the return until the date of payment. Repeated mistakes or consistent delays in filing might flag your business for increased scrutiny from the IRS.

Interestingly, Restricted Stock Units (RSUs) do not necessitate the use of Form 3921. This is because RSUs and ISOs are inherently different mechanisms of stock-based compensation. ISOs grant employees the option to buy company stock at a predetermined price, whereas RSUs essentially promise shares of stock or the cash equivalent upon vesting.

An ISO can only be granted to a valued employee by a corporation, whereas NSOs can be offered to any individual who works with a corporation, such as a contractor. Companies that use Pulley can generate Form 3921 directly in the platform. We automatically produce the paper copies of the form, and ahead of the 2022 tax season we’ll be able to produce the Copy A file that can be used on the IRS’s FIRE system. As of 2022, Form 3921 must be filed on paper by February 28 or electronically by March 31 of the year following the tax year in question. This difference in tax treatment is a key reason why the IRS requires companies to provide Form 3921 as an informational tax form. The difference between the fair market value of the shares and the exercise price is known as the spread.

  1. Periodic reviews and audits are important for the financial health of a business.
  2. In most of our articles, we walk you through how to complete the tax form.
  3. Enter this information only if the corporation is not the entity shown in the TRANSFEROR boxes in the upper left corner of Form 3921.
  4. Any employer, whether a multi-billion-dollar enterprise or a budding startup, that has granted incentive stock options (ISOs) to their employees, steps into the spotlight when these ISOs are exercised.

For more information, see part M in the current version of the General Instructions for Certain Information Returns. The corporation whose stock is being transferred must file Form 3922. If you are required to file Form 3921, you must furnish a statement to the person whose name is set forth on Form 3921.

When does my startup need to file Form 3921?

Your dedicated expert will find every dollar you deserve, guaranteed. Lastly, maybe your former employer’s benefits department might have the information you need. As with most official forms, you can find a copy of Form 3921 on the IRS website. For informational purposes, a copy of the form is also available below. Check out our step-by step instructional guide for more information on how to submit your information return with IRS Form 1096.

Transfer Information

Tax documentation can be a complex landscape for employers, particularly when processing contractor payments during tax season. One important document is IRS Form 1096—it’s kind of like the cover letter for your 1099 forms when you’re mailing in paper versions of the forms to the IRS. It’s the required way to summarize the information on the 1099 forms sent to independent contractors, vendors, and other non-employees during the year. You do not want to include zero as your cost basis as you will be paying much more in tax than required. If you know when you purchased the shares, you can use a third party financial website, such as Yahoo Finance, to check the market price on the date you purchased your shares.

Whether you’re a seasoned business owner or a fresh startup founder, understanding Form 3921 is important in safeguarding your company’s financial health and reputation. Send Copy B to the employee who exercised the ISO during the tax year. Those filing by mail are required to order physical copies of Form 3921 from the IRS. If you are using the downloadable version of Form 3921, do not file Copy A, which is the red copy.

To ease statement furnishing requirements, Copies B, C, and D of Form 3921 have been made fillable on-line in a pdf format, available at For the latest information about developments related to Forms 3921 and 3922 and their instructions, such as legislation enacted after they were published, go to or

Form SSA 1724 Instructions

Shares of stock transferred as a result of the exercise of an option described above must be identified in a manner sufficient to enable the accurate reporting of the transfer of legal title to such shares. This identification can be made by assigning to the share certificates of stock issued pursuant to such options a special serial number or color. Corporations file this form for each transfer of stock to any person pursuant to that person’s exercise of an incentive stock option described in section 422(b). The specifics of the stock, including the number of shares involved in the ISO exercise, are fundamental. It’s also just as important to mention the stock’s value on the transaction date and the price per share.

Watch this informative video to learn more about how your employer will report ISOs on Form 3921. In extreme cases, where non-compliance is deemed to result from fraudulent intent, the IRS might pursue criminal charges. Though rare, it underscores the importance of treating these forms with utmost seriousness.


Additionally, the IRS encourages you to designate an account number for all Forms 3922 that you file. See part L in the current version of the General Instructions for Certain Information Returns. The account number is required if you have multiple accounts for a person for whom you are filing more than one Form 3921.

Entering amounts from Form 3921 in the individual module of Lacerte

As with most information returns, it is a good idea to retain your Form 3921 in your tax records. However, the IRS does not require you to file this form with your tax return. All sales that do not meet the criteria of a qualifying disposition are disqualifying dispositions.

When you receive form 3921, this means that your employer transferred stock to you because you exercised an incentive stock option (ISO). Because this is a statutory stock option, there are generally no tax consequences for having exercised the option. The due date for all employers form 3921 turbotax to issue IRS Form 3921 to their employees is January 31 of the calendar year following the exercise of ISOs. This includes any former employee who exercised their stock options after leaving the employer. Moreover, RSUs, by their very design, offer a form of flexibility in taxation.